Inove Ingles

Inove Program

April 28th , 2009

Agenda

ContextContext

Inove at a glanceInove at a glance

ResultsResults

Oman approachOman approach

Next stepsNext steps

ContextContext

The implantation of VALE’s Pellet and Port Complexes in Oman will have to surpass some challenges, such as the development of a local supply chain of goods and services and the generation of jobs….

Investment of US$ 1,4 billion - process around 40 MTPA of Brazilian ore and produce up to 10 MTPA of Pellets (initial production expected to 2011)

The local industrialization is low, not so diversified and the exports are concentrated in oil, natural gas, fishing, textile products and metals.

There are 3,3 millions of inhabitants in Oman, with average age of 19 years, unemployment rate of 15%.

VALE faces the challenge of developing a competitive and reliable local supply chain of goods and services, in order to allocate the Oman’s manpower in the market and increase the participation of 65% of direct residents employees in the Startup of the Pellet Complex, to 80% of the total manpower involved in VALE’s plants production, after 4 years of operation.

Vale's operations

South and

southeast regions

Less developed regions Less developed regions

(27% of GDP)(27% of GDP)

Less developed regions Less developed regions

(27% of GDP)(27% of GDP)

Greater need to leverage local Greater need to leverage local supplierssuppliers

Greater need to leverage local Greater need to leverage local supplierssuppliers

Opportunity to reduce Opportunity to reduce imbalances and improve imbalances and improve community perceptionscommunity perceptions

Opportunity to reduce Opportunity to reduce imbalances and improve imbalances and improve community perceptionscommunity perceptions

More developed regions More developed regions

(73% of GDP)(73% of GDP)

More developed regions More developed regions

(73% of GDP)(73% of GDP)

ContextContext

In Brazil while south and southeast regions hold 73% of the Brazilian GDP, Vale´s operations are concentrated in other areas of the country, generating a similar challenge than Oman in terms of local suppliers development

New Program

VALE

Inst

ituti

onal

Rela

tions

H&

S a

nd

Envir

onm

ent

Op

era

ting

Are

as

Pro

cure

ment

HR

& F

inance

Com

munic

ati

ons

Found

ati

on

Macro Plano de AçãoFinanceiras

Capacitação

Normas e Processos

Divulgação

Revisão de Processos

Análise Demandas vs.

Integration

Action PlanFinanceiras Normas e

Divulgação

Financials

Training

Policies & Processes

Disclosure

Government/ Trade Unions

Governance Model

LocalSuppliers

Oth

ers

ContextContext

Based on the 2008 diagnosis of local industry, Vale decided to implement Inove, a new development program to leverage local suppliers….

Objectives Scope

Local Content Growth

Support investment plan

Labor training

Increase competitiveness of local industry

Assure service and material supplies

Inove at a glanceInove at a glance

…that aims to reinforce the relationship with these suppliers through training programs, financial tools for credit access and new business opportunities generation…

Business Development

Education Financial

Inove Program Pillars

• Labor

• Management

• Certification

• CDF

• FFF

• FIDC

• BNDES

•Joint-Ventures and Partnerships

• Industry Diagnostics

•National forum

Sensibilizaç ão

Crité rios IDF

Planejamento Demanda

Formaç ão de Preç os

Fornecedor Classe Mundial

Elaboraç ão de Proposta

Planejamento Estraté gico

Price formation

World class supplier l

Proposal formulation

Strategic planning

22 Roadshows and 700 ParticipantsFirst national forum to discuss local suppliers development

Business development

R$ 11,7 Million (dec/08 to mar/09) Target: R$ 120 MM

Financial

Online courses pilot training: 10 companies and 60 employeesLaunching of the online courses: June/2009

Target: 100 companies and 1.000 trained employeesin online courses

Education

ResultsResults

…and after five months of Inove implementation we have already achieved some background and important results

Oman ApproachOman Approach

Based in this background, we recommend the development of a supply x demand diagnosis in Oman to indicate main gaps in local supply capacity, enabling the evaluation of supply alternatives in neighbor countries + providing guidelines for structuring an action plan…

Identify VALE’s demands in Oman;

Identify critical resources (goods and services);

Elaborate critical resources demand data base and histograms

Development of tools to leverage Oman suppliers

Structure action plan to implementation of Oman local supplier development program

Gap Analysis, Supply Alternatives and Action Plan Definition

Demand DiagnosisDemand Diagnosis Supply and Gaps Identification in Oman

Supply and Gaps Identification in Oman

Step 1 Step 2 Step 3

Action Plan ElaborationAction Plan Elaboration

Assess critical resources supply;

Consolidate supply and demand data;

Identify gaps;

Elaborate matrix to prioritize critical resources gaps.

Interaction with Project Board to set drives and validations.

Analyze association of local Brazilian suppliers to attend Oman needs

Share of technology and knowhow

Brazilian suppliers commercial missions to Oman

Vale´s international presence

Next StepsNext Steps

…and in order to support Oman demands and generate new business opportunities to local Brazilian suppliers, we have defined some next steps

Back up

Inove´s CalendarInove´s Calendar

Roadshows

Inove Forum

Identify together with stakeholders initiatives to develop local suppliers

North Technical Seminars

Governance meetings start-up

South Technical Seminars

MayMay JunJun JulJul AugAug SepSep OctOct NovNov DecDec JanJan FebFeb MarMar AprApr MayMay JunJun JulJul AugAug SepSep OctOct NovNov DecDec

Pará Diagnosis

Inove implementation

Dec 4th – Inove Kick Off

2008 2009

Regional Awards

Suppliers Day (North & South)

Online Courses launching

Inove National Award

• Line for funding with financial institutions and destined to suppliers participating in local supplier development programs (PDFs)

FFF – Financial Funding for Suppliers

CDF – Credit for suppliers

• Working capital solution for Vale´s suppliers to anticipate of their invoices with covenant banks

Financial ProductsFinancial ProductsFinancial tools to facilitate access to credit and provide resources to Vale´s suppliers

Diagnosis

Procurement Policy Review

Joint-Venture and Partnerships

• Diagnosis of gaps in supply and demand for the states of PA, ES, MG and MA by comparing the local industry capacity and Vale’s local demands for the next 5 years

• Review of Vale’s procurement policies to incentive increase in local content

• Development of incentives with local supplier development programs (PDFs) for the creation of joint-ventures and partnerships between local suppliers

International Missions

• Create incentives for Vale’s local suppliers in Brazil to export to countries where Vale has investments, in order to attend the local demand as well as establish partnerships to develop local suppliers

Business Development ProductsBusiness Development ProductsPromotion of local businesses, such as revision of internal standards and procedures, formation of alliances between suppliers and trade missions abroad

Inove Forum

Labor Development Program

Management Training “Track”

• Annual event with main internal and external stakeholders to discuss strategic topics related to the pillars of Inove Program

• Partnership with local supplier development programs (PDFs) to organize and complement training offered to labor, aligned to IDF criteria and other specific requirements from the mining industry

• Online and on-site training to develop suppliers management - also in partnership with PDFs

Education Award• Launching of education products and incentives to promote

adhesion to Inove education programs

Supplier Day • Event with suppliers to discuss strategic themes from IDF

Technical Seminars• Event with suppliers including lectures and round tables

about the proposed themes during the Inove Forum

Education ProductsEducation ProductsManagers and labor training programs, events and seminars for discussion of topics aligned to the Program

Inove Site

Inove Folders

Roadshows

• Internet Site information highlighted in Vale´s homepage

• Promotion material for communication detailing all initiatives from Inove program

• Local events to promote the initiatives and products for internal and external stakeholders

Executive Panel • Panel that shows detailed information to support managers

decision (local acquisitions, investment map, training achievements, suppliers performance, credit access)

Communication and Promotion ProductsCommunication and Promotion ProductsCommunication strategy based on spontaneous media and promotion materials for dissemination of Inove´s results